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Taxpayer invested in two partnerships totaling $70,000.00.

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K-1's received for a number...
Taxpayer invested in two partnerships totaling $70,000.00. K-1's received for a number of years showing zero income and expenses. Taxpayer receives each K-1 showing $70,000.00 invested and no adjustments until a final k-1 is received where the total investments are Zero, and they showed only a reduction of $70,000.00 but no income or deductions on the final k-1. It seem the taxpayer has lost all his investment and the reduction seems to be solely the Syndication Costs. Does the taxpayer have a loss to be reflected on his personal tax return as a capital loss? The partnership was established for Oil exploration.
No additional information has been received from the partnership.
Thank you for your response.
Submitted: 5 months ago.Category: Tax
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Answered in 7 minutes by:
11/13/2017
Tax Professional: Lev, Tax Advisor replied 5 months ago
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 32,677
Experience: Taxes, Immigration, Labor Relations
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As that is a FINAL K1 - yes - that will be a loss realized on the disposition of the partnership interest.

That disposition is reported as a sale

Because there is no distribution - the deemed sale price is zero.

The basis is original investment $70k - which is adjusted every year based on reportable items on K1.

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Tax Professional: Lev, Tax Advisor replied 5 months ago

The taxpayer will need to use worksheets to determine the adjusted basis.

Yes - that will be capital loss and because that is a final K1 - passive loss limitation will not apply.

For additional details - see page 11 - Disposition of Partner's Interest

https://www.irs.gov/pub/irs-pdf/p541.pdf

Let me know if you need help with reporting.

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